Arbitrage occurs when:
A. bond and stock rates of return equalize.
B. investors try to profit from selling a lower rate of return asset to buy one that is nearly
identical but with a higher rate of return.
C. rates of return across all stocks equalize.
D. investors move from lower to higher rate of return assets, regardless of the comparability of
the assets.
B. investors try to profit from selling a lower rate of return asset to buy one that is nearly
identical but with a higher rate of return.
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Politically, one reason trade restrictions are common is that
a. the many beneficiaries of free trade each gain a small amount whereas the few losers, lose enough to lobby for restrictions. b. the beneficiaries of free trade collectively gain a small amount whereas the few losers, collectively lose much more. c. the few beneficiaries of free trade each gain a large amount and the many losers, lose enough to lobby for restrictions. d. foreign corporations bribe politicians.
The Federal Reserve (Fed) was criticized for playing a role in causing the Great Recession. Which of the following criticisms most accurately captures this criticism?
a. The Fed kept monetary policy loose for too long, thereby fueling speculation in the housing market. b. The Fed kept monetary policy too tight immediately after the 2001 recession and then loosened it just prior to the recession, thereby precipitating the crisis. c.The Fed relaxed banking regulations after the 2001 recession, causing banks and other financial institutions to engage in speculative activities for which they were unprepared. d. The Fed encouraged home ownership by putting pressure on Fannie Mae and Freddie Mac.
The goal of utilitarians is to
a. apply the logic of individual decision making to questions concerning morality and public policy. b. measure happiness and satisfaction. c. redistribute income based on the assumption of increasing marginal utility. d. All of the above are correct.
A price-setting firm
A. can raise the price of its product and sell the same number of units. B. can lower the price of its product and sell more units. C. possesses little market power. D. sells a product that is not differentiated from the product sold by its rivals or sells in a limited geographic market area with only one or a few sellers.